Stages of Life

Time flies…it seems like only yesterday…where have the years gone?

All of us will probably at some stage have uttered these expressions as life gets more hectic and it seems more and more difficult to squeeze everything into the day, the week, the month and the year. But sometimes it is important to stop and take stock of the position you and those close to you are in. Here we give some pointers as to what all of us should be thinking about, whatever stage of life we have reached.

The Lively 20s!

Many people start a job in their 20s and find a partner or get married, whilst others stay single. 

In either case, earning a salary may result in some spare funds being available, which should make you think about starting some form of savings either in a Bank or Building Society or, for the more adventurous, through some exposure to the stock market. This can be particularly useful for building up a deposit for buying a house, for example.

Pension savings is very much in the news and it is more than likely that you will be enrolled automatically in a workplace pension arrangement, to which you and your employer will contribute.

Perhaps the biggest step most people take in their 20s is buying a property. You will have to think of what kind of mortgage you need and how much you can afford.

What life cover should you have – if any? Should you also consider Income Protection Insurance or Critical Illness Cover? As you begin to acquire possessions and belongings you should also put in place a Will – so that should disaster strike, your chosen beneficiaries will inherit.

30 Something

For many of you, there will now be joint incomes and your lifestyle can be more comfortable.

Savings schemes begun in your twenties should be reviewed– perhaps stock market investment is now more attractive. Perhaps you can afford to pay a bit more into your pension arrangement.

If you are looking to begin a family, this will often happen in your 30s and you will need to consider the cost of clothes and education, and a drop in household income through one of you perhaps giving up work or moving to part-time employment.

Statistics show that there is a 20% chance of being off work for six months or more during your working life. Whether you are single or married, and with or without children, income protection provisions should be considered. What about Private Medical Insurance? And if you do have children, are your Wills up to date (with guardians appointed should both of you die, for example)?

40+ The Middle Age Spread!

Usually, most peoples’ lifestyles are fairly established by this stage of their life. However, the children will continue to draw on your funds – private schools, perhaps, educational trips, sports equipment and iPads to name but a few!

If you did take out a mortgage in your 20’s it could be coming to an end – time to review everything connected with that. Maybe you need to move to a bigger house? It may be appropriate to top up your pension or at least make sure the funds are building up at a satisfactory rate. Many people in this age group have the concern of elderly parents – and the drain on cash flow this can bring.

50’s Where have the last 30 Years Gone?

Pension entitlement should figure highly in your mind at this time as retirement starts to looms large.

Children may have grown up and left the home. Would you prefer a smaller property? You should ensure there is still sufficient life cover in place and that Wills are up to date. It is now quite normal to grant a Power of Attorney to allow your affairs to be dealt with in the event that you are unable to deal with them personally.

It is likely your income in retirement will be somewhat lower than when you were working. Have you considered this and how it may impact on your future plans?

If your parents are still alive they may be resident in a nursing home – have they had to sell their own home to fund this? – and have you, as a result, lost the inheritance you were perhaps depending on?

A number of arrangements can be put in place which can help with these scenarios but you need to consider them at the earliest opportunity.

60s Where have All the Years Gone?

Most people retire in their 60’s. This can bring a new lifestyle – maybe you want to travel or take up a new hobby? But there may be a drop in income to balance. Or maybe you have received a lump sum from your pension fund which you need to do something with.

Getting older isn't all bad news, of course: State and personal/workplace pensions will start to pay out, you will pay less income tax and National Insurance, and outgoings associated with working will be reduced. However, you will have to keep yourself occupied and some household expenses, such as heating and lighting, may be higher than when you were working because you are not out all day at work.

If you have amassed wealth you should consider your Inheritance Tax position. At present, estates over a certain value (currently £ 325,000 – October 2014), known as the Nil Rate Band, not passing to an exempt beneficiary (spouse or charity being the most common) pay 40% on the excess. A surviving spouse will normally also inherit the deceased partner’s Nil Rate Band, giving a total effective ‘allowance’ of £650,000. Yet with a little planning this tax often can be avoided.

There may also be grandchildren to consider. If your children are doing well in their own Stages of Life, it might make more sense to pass your estate to your grandchildren rather than to your children. This would potentially avoid a double dose of Inheritance Tax – once when assets are passed to your children, and then again when the same assets are passed to their children.

If long-term care costs have been an issue with regard to your parents you may wish to consider long-term care insurance. This would provide a chosen annual income on payment of a monthly or lump sum premium/investment. It could protect your estate for your beneficiaries and take all financial worries away from you and the younger generation.

70+ It Seems Like Only Yesterday!

For most people in their 70s and older the main concern is independence and dignity. You will likely want to stay in your own home although you could perhaps do with some help. Organisations exist which can provide this help – we can point you in the right direction.

If you don’t want the bother of dealing with your own finances, you can use a Power of Attorney so that your Attorney can do these things for you. The advantage of allowing your lawyer to do this is that he or she can be trusted totally withy our estate. He or she will account to you for all your affairs at any time you enquire or as often as you want. Of course, WJM can provide these facilities.

For those who decide there is no option but to move to alternative accommodation, WJM may be able to help in finding a suitable place. Our colleagues in our Private Client team know about sheltered, residential and nursing homes in the area and we can also provide guidance through the maze of Social Work Departments involvement. WJM can also help with applications for Attendance Allowance or other available benefits.

In Scotland if you are aged 65 or over and living in a care home which you pay for yourself, and you are assessed as having personal or nursing care needs, your Local Authority can provide a flat rate payment for the Personal and Nursing Care component of your care home fees. People of all ages can receive payments for nursing care if they have been assessed as requiring that service.

This means that you will only be liable to contribute towards your accommodation and living costs in the care home (the 'residential' component of your care home fees). Payments for personal and nursing care are only part of the care home fees.

Rates from April 2014:

  • £169 for personal care per week
  • £77 for nursing care per week

These payments for personal and nursing care are paid directly to the care provider on your behalf by the Local Authority but only after an assessment of your care needs has been carried out and a contract is in place between the Local Authority and the provider. Payments for personal and nursing care will only start once the contract is in place, and there is no requirement for the Local Authority to backdate these payments to the date you moved into the care home; this is set out in the Free Personal and Nursing Care Guidance.

If you choose to receive the payment for the Personal Care component of your care home fees, you will no longer be eligible for Attendance Allowance after 28 days and you must inform the Department of Work and Pensions of your change in circumstances.

WJM can help structure your finances to your optimum benefit.

Wills should be kept up to date as there may be grandchildren or even great grandchildren to provide for; sadly, some beneficiaries may have died and so should be removed from the Will.

We hope this gives a flavour of things that you should be thinking about as you move through life. There is a certain amount of overlapping between the various categories so that those of us in our 20’s could, for example, be faced with the cost of elderly parents or grandparents going into care.

What we hope our Stages of Life will have done is to make you stop and think about whether you are happy with your current arrangements. If not, or if you would simply like to review your situation, we will be happy to help.